Great film, great song! That's Emmylou Harris, singing with Alison Krauss and Gillian Welch. (Emmylou is a sweetie and sang backup vocals for me on my first album. We were both on Warner Bros. Records at the time). Oh, the stories I could tellya!

No, that is not a theremin on the recording. I'm not certain what it IS, but I am certain it is not a theremin.